February 2, 2023

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TDF signed; BSP cites a preference for cash passing on rate hikes

THE preference for cash ahead of the holiday season, coupled with the Monetary Board’s recent policy rate hike, resulted in the Bangko Sentral ng Pilipinas (BSP) Term Deposit Facility (TDF) being signed.

On Tuesday, the BSP accepted P232.469 billion of the P233.469 billion offers it received for the TDFs. The BSP awarded P110.737 billion out of P111.737 billion bids in the 8-day period and accepted all P121.732 billion bids received in the 15-day period.

Total supply volume was allocated between the 8-day and 15-day maturities at P180 billion out of P200 billion and P150 billion out of P160 billion, respectively.

“The results of the TDF auction continue to reflect the pass-through of the recent GNP interest rate hike. Additionally, the signings could be attributed to an increasing preference for suitable counterparties for cash in preparation for the holiday season,” said BSP Deputy Governor Francisco Dakila Jr.

“Going forward, BSP’s monetary operations will continue to be guided by their assessment of recent liquidity conditions and market developments,” he added.

The resulting weighted average interest rates (WAIR) for the accepted bids in both maturities continued to rise from last week.

The WAIR for the 8-day TDF rose 25.9370 basis points (bps) to 5.7514 percent, while that for the 15-day TDF rose 20.2688 bps to 5.8662 percent.

Accepted yields also shifted higher, but narrowed to a range of 5.4900-6.0250 percent for the 8-day term and 5.6000-6.1750 percent for the 15-day term.

Before that, Bangko Sentral ng Pilipinas (BSP)’s decision to hike interest rates on the back of recent Federal Reserve policy actions could hurt the country’s growth prospects, according to the National Economic and Development Administration (NEDA) and local economists.

The Monetary Board’s recent decision to raise interest rates by 75 basis points raised the rate on BSP’s overnight repo facility to 5 percent from 4.25 percent.

GNP Governor Felipe M. Medalla said the Monetary Board will align with Federal Reserve policy in its upcoming Nov. 17 interest rate hike as US interest rates rise by 75 basis points (bps). (Full article:

Credit: Nonie Reyes